It’s been a busy week in UK politics: Prime Minister David Cameron defended top-up fees to the tune of 50,000 students rioting in central London; Secretary of State for Work and Pensions Ian Duncan Smith revealed new sanctions for claimants of unemployment benefit and, ahead of the G20 meeting in South Korea, Bank of England governor Mervyn King warned of the threat to our economy if chronic global imbalances persist. Amidst all of this, the 2020 PST and RSA brought together scores of public, private and voluntary sector leaders at our Public Services Summit on Tuesday.

Sir Andrew Foster, Chair of the 2020 Commission, highlighted the timeliness of our focus: at this time of fiscal austerity, threats to our public services from cuts are at the top of the political agenda. The ‘phoney war’ on budgets is set to launch a real offensive. More than this (and despite genuine efforts from frontline professionals, managers and politicians) the ‘long tails’ of underperformance have left us falling short of what we want, expect and need from our public services. Public services need to be redesigned so that they are fit for lives we lead and the society we want to create in the 21st Century.

In his keynote speech to the 2020PST/RSA Summit, Rt Hon Francis Maude MP set out the Government’s three-pronged approach to transforming public service delivery:

Channel shift – moving more public services online (e.g. building on the success of the online DVLA vehicle tax renewal, initially to transactional services such as Student Loans and some welfare benefits);

Mutuals – enabling service professionals and users to take a real stake in their public service organisations, unlocking the energy and innovation of ‘entrepreneurial frontline’ staff (e.g. Central Surrey Health); and,

Payment by results – paying providers (of any and every type) for the outcomes they achieve, not pre-funding them so they have limited incentives to aspire to more efficient and effective social outcomes (e.g. Single Work Programme and rehabilitation of offenders).

The 2020 Public Services Trust has examined each of these throughout the course of our research programme. Our Final Report, ‘From social security to social productivity’ calls for implementation of all three in some form.

But as always, the questions on my mind come back to accountability. Francis Maude referred to the other big announcement of this busy political week – that of our ‘revolution’ in transparency and the relationship between citizen and the state. But here the overwhelming consensus at the Summit, in Westminster, and beyond (for the need for change) starts to break down. Lord Andrew Adonis said that recent announcements did not represent a redrawing of the lines between citizen and the state; “For as long as the State pays for services, Government will be held to account. If the Government doesn’t set indicators/targets, the media will.” Matthew Taylor quoted some of the more obscure passages from one of the departmental business plans (published on Monday), designed to enable citizens to monitor and scrutinise Government more closely.

Number 10’s Transparency website is a welcomed start to what will be one of the most interesting and important questions for our democratic society: how do we – the public – engage with our Government and public services? It is a question that speaks to the availability of quality data; the provision and interpretation of information; mechanisms for citizen/user feedback and redress; public trust in politicians, and, the legitimacy and efficacy of our political system. These challenges of governance and society have been with us since time immemorial; as was the aim of 2020 PST and our Commission, they give a single busy week a longer term perspective.

Matthew Taylor’s blog on social capital this morning is a good counterexample to the myth that low income families are less able to engage with public services and their communities for lack of the time and energy enjoyed by the middle classes.

As Matthew suggested, there is a lot to be said for government and public services changing their cultures and institutional incentives “to enable managers and front line workers to engage citizens as co-producers of public value”. But I would argue that organisations need to think beyond themselves – their systems and structures – in trying to encourage social productivity. Instead, they need to consider the multiple ways in which people are motivated and live their lives.

The difference between Mario Luis Small’s thriving community and the childcare centre where parents didn’t even show up for a pizza party showed that social capital is created when citizens deciding for themselves that their involvement leads to better outcomes. The article suggests some of the ways they might be motivated to reach this conclusion, including:
• Financial incentives are just one of many reasons people feel inspired to work together; it is cheaper (in pure monetary terms) for mothers to volunteer their time in taking children to the zoo or museum than to pay the $300.
• Reciprocity – the promise of future help/support in return – I’ll pick your child up from school if you can return the favour another time.
• Friendship – social networks and relationships are the bedrock of human happiness – in meeting other parents and families in the neighbourhood we’re building our own, new community in which we feel a close sense of belonging.

Fear of cuts might to act as a financial incentive. We know from behavioural economics that we are ‘more averse to loss than gains’ and a snippet from Liverpool on the Today Programme this morning suggested this might be the case in practice (e.g. community groups buying out local pubs which would otherwise close).

But how might organisations and/or government ‘sell’ the other social benefits of coproduction? (“Come, volunteer – you might meet some new friends!” isn’t such a bad pitch when loneliness is said to be a hidden ‘epidemic’ of modern times.) If we can build social capital on a foundation deeper and more sustainable than financial incentives alone, we might root our principle of social productivity more firmly in the values we are trying to instil for our communities.

“This evening the Commission on 2020 Public Services – of which I am Chair – launches its Interim Report: ‘Beyond Beveridge: principles for 2020 public services’. The report is the culmination of a long period of discussion, deliberation and, ultimately, agreement. We are a diverse commission, representing many political, professional and personal backgrounds. That we have come together with a common voice is surely significant.

This interim agreement at a moment of crisis for public services is what makes the recommendations of our Commission worth considering. All 20 Commissioners agree that narrow critiques inevitably find their way to narrow solutions. So our critique is broad; and our vision for the future is positive and coherent. Short-term solutions to the debt crisis dominate the press. So our report looks to the longer term – arguing that short-term decision making must be underpinned by deliberate and strategic principle.

Ultimately, the Commission is about finding a way to develop public services that do better by the people who most rely on them. We believe in public services as things we all benefit from. But outcomes are failing some citizens. The structural basis of our system – designed by William Beveridge in his 1942 report – is no longer adequate for the new world we live in.

Today’s report sets out the Commission’s interim findings. We lay out a positive vision for public services, and some building blocks to get us there. Our own next steps involve grounding these principles in the real lives of citizens and those who work in public services. We will present our final recommendations in summer this year.”

Together with its interim report, the 2020 Public Services Trust is publishing an essay by Professor Howard Glennerster entitled Financing the United Kingdom’s Welfare States and a report prepared by Ipsos MORI called What do people want, need and expect from public services. Professor Glennerster’s essay reveals the extent of the hole in our public finances and advocates partnership approaches between the state and citizens to fund public services. The report by Ipsos MORI uses the most up to date quantitative and qualitative research to explore the public’s priorities and anxieties and suggests how the relationship between citizens and their services might change in the future. These papers have enriched the Commission’s understanding of the context in which it operates – from the perspective of citizens, and with the country’s delicate fiscal situation in mind.

2020PST’s Ben Lucas and the RSA’s Matthew Taylor called for a real debate on public services this week, and it looks like their call to action is being heard. The Labour line on public services has shifted to something more realistic, and the Conservatives – having come out swinging much earlier in favour of spending cuts – are being forced to start giving us the detail on scale, aim and timing.

Lots more divisions will emerge, but one interesting upshot of this is that, improbably, the Tories have committed to ring-fencing health and overseas aid, whilst the government has not. This means that Cameron will have to make some serious inroads elsewhere, perhaps even completely eliminating MP’s rocket and balsamic vinegar allowances.

To be fair, neither party has really driven any stakes in the ground yet. Surely some proposals will be unveiled during the Conference season, but to date it has been left to backbenchers and thinktanks to fight a proxy war. And even this has been mostly fought (2020PST excepted!) on strategies to make immediate savings, rather than what a sustainable and productive long-term vision might require. But as Tony Travers notes, “British politicians will surely consider radical steps in the months ahead if they are to protect the core purposes of the state.”

Charles Clarke and Michael Fallon have both weighed in this week with their suggestions on what such radical steps might be. Both articles are worth a read (especially Michael Fallon’s depiction of the “Bermuda triangle in which local initiative and responsibility are lost”), and my guess is that they also betray two ideological start and end points: Clarke’s a desire to ensure fairness; Fallon’s a desire for fiscal prudence and efficiency.

The fact is that both parties may have to cross this divide. The left will need to re-think their assumptions about fairness within a spending regime that must take into account huge demand challenges and severe fiscal constraints. Not easy. The right will have to think hard about the implications of putting the imperative to cut before the human effects of reduced service guarantees.

The stakes are so high that we should be pleased when policymakers take some time to do the hard thinking. But we need to feel they are asking the right questions – and thinking about short-term savings is only half the battle.

Mathew Taylor in his blog yesterday, makes the point that what is missing from public debate is a strong economic case for public services. This is because the post-war welfare state settlement was conceived partly as being about social justice and partly about social amelioration. Of course it had an economic function, to maintain a healthy and contented workforce, but this economic case was not the explicit rationale for the settlement.

If you separate the public service settlement from the economy then it is inevitable that the sole focus becomes what society can afford. Yet the real question should be what is the welfare state/public service settlement designed to achieve. Here as Roger Liddle, Chair of the Policy Network, and one of our 2020 Commissioners has pointed out, there is something we can learn from continental Europe. There the question of welfare reform is posed in explicitly economic terms. The aim of social and welfare reform is to enable the highest possible level of participation in the workforce, so as to create a more sustainable society and a tax base that can fund pensions, health care etc.

In the UK there is a danger that the focus will be exclusively on debt levels in public finance rather than the wider economic challenges, of which debt levels are part. We should be at least as worried about the decline in the tax base, as about debt levels. In the medium term the biggest challenge that Britain will face will be about the dependency ratio – the proportion of the population that contribute through taxation to society, as opposed to the net beneficiaries. Demographic change allied with globalisation will lead to an older society, with a smaller proportion of people in work and a further decline in ‘traditional working class jobs’.

Public services face a perfect storm of growing demand pressures as a result of demography, globalisation, behavioural challenges and climate change combined with a massive funding squeeze. The proper response to this would be a new public service settlement with the twin objectives of increasing both economic and social participation in society. This then makes the case for talking as Matthew Taylor does about public service productivity, but also for focussing on what can be done through public service reform to boost participation in the workforce. This ranges from skills, education and training policy through to welfare reform and early intervention. Some of this policy work has been developed by Government and Opposition. What has been missing so far is a strategy which links public service reform with economic growth.

This is a theme which we will be focussing on over the next few months, as our Commission on 2020 Public Services develops its key propositions for a new social settlement.